Over the past seven days, we are thrilled to have sold another 5 properties for our Happy Sellers!
There are plenty of buyers around and I’ve had numerous comments over the past few days that many of these buyers feel there is still a shortage of quality new listings coming onto the market.
Current trends do point towards some slight increases in median prices but as we’ve mentioned in recent weeks, the cooling of the southern markets, the Banking Royal Commission and a possible interest rate rise in the foreseeable future may counteract any positive progression – As they say, only time will tell.
A couple of weeks ago, I discussed my “Top 10 Greatest Buyer Myths” (Feel free to e-mail me if you haven’t received this and I’d be more than happy to re-send these to you).
Today I’m introducing my “Top 10 Seller Myths” – the greatest misconceptions and false assumptions that sellers make when selling their homes.
Let’s get straight into it…
- “There’s no point in making any cosmetic improvements, buyers won’t like my choices” – There’s no question that we’ve seen sellers spend precious dollars replacing old worn carpet with gorgeous modern carpet only for the buyer to rip it up and replace it with a polished timber floor the day after settlement – but to be honest, this is quite a rare occurrence. As you may have read in my newsletters before, my belief is that floor coverings, paint and basic landscaping are great ways to invest money with a vast majority of sellers profiting from these improvements. Even if the new owners are about to make significant changes, a home with fresh paint and new carpet has a better feel than a home that is dated and needs immediate money spent – and it is ‘feel’ that dictates the offers made by owner-occupiers (which still account for 90 – 95% of the buying public right now). Additionally, if the cosmetic changes mean that there are more buyers inspecting and showing interest, there’s every chance that a good agent will utilize the activity to drive the price as high as possible – irrespective of the new buyers’ intentions.
- “I have a bank valuation of X and I know that bank valuations are very conservative so I know my home is worth an extra $50,000” – This certainly used to be the case several years ago but over the past few years, I’ve seen more current bank valuations that are considerably higher than the current market value than I have vice versa. As I also discussed recently, a valuer’s job is not easy – especially when they have nothing to guide them when a property valuation has been requested without it being on the market. Professional valuers do not talk to buyers on a daily basis and are probably not quite as in touch with current supply and demand levels…and are not as acutely aware of exactly what features will likely attract a premium price. I stress, this is not a shot at valuers – their jobs are not easy! I generally receive 2-3 phone calls per week from valuers who are after assistance in trying to determine current market value of a property that they have been engaged to value. Valuers often consider replacement cost and this can be a path fraught with danger as you’ll see from my next point…
- “It would cost at least $600,000 to buy the land and build this home again so it must be worth at least that amount and probably a lot more” – Again, a few years ago, ‘Yes’ but not anymore. Unfortunately, purchasing a brand new home is now more likened to purchasing a brand new car. The second you drive it out of the showroom, it loses a certain value immediately (although thankfully, certainly not as much as a new car). This is more prevalent in new areas where there are traditionally more homes on the market and it is not uncommon for a home to be worth 90-95% of what the owners paid for the total of the land and build cost. With more people renovating than we’ve ever seen before (probably due to the increase in popularity of home renovation TV shows), buyers will generally avoid paying a premium price for a renovated property when they can do it themselves for a lesser amount. As such, it’s far easier to over-capitalise than it has ever been before and at the end of the day, buyers don’t care what you’ve spent – they’ll determine the value of your property based upon what else they can purchase for similar money. In summary, the cost of building and renovating needs to be very carefully considered if you’re looking to turnover a profit shortly after significant work has been done.
Next week, I’ll move on to part 2 of my “Top 10 Seller Myths” so until then, Happy Listing & Happy Selling.